Recording of Transactions - 1 — Account STD 11 Commerce — Question

Prepare an Accounting Equation from the following:

1. Started business with cash ₹ 50,000 and goods ₹ 30,000.
2. Purchased goods for cash ₹ 30,000 and on credit from Karan ₹ 20,000.
3. Goods costing ₹ 40,000 were sold for ₹ 55,000.
4. Withdrew cash for personal use ₹ 10,000.
5. Rent outstanding ₹ 2,000.

Rohit has the following transactions:

a.	Commenced business with cash	₹ 1,50.000
b.	Purchased machinery on credit	₹ 40,000
c.	Purchased goods for cash	₹ 20,500
d.	Purchased car for personal use	₹ 80,000
e.	Paid to creditors in full settlement	₹ 38,000
f.	Sold goods for cash costing ₹ 5,000	₹ 4,500
g.	Paid rent	₹ 1,000
h.	Commission received in advance	₹ 2,000

(Ans: Assets = Cash ₹ 17,500 + Machine ₹ 40,000 + Goods ₹ 15,000 = ₹ 72,500; Liabilities = Commission ₹ 2,000 + Capital ₹ 70,500 = ₹ 72,500)

Is Reserve a charge against profit or an appropriation of profit? Discuss.

Pass Journal entries in the books of Hari Shankar & Co. from the following:

2017		₹
April 1	Commenced business with cash	50,000
April 2	Purchased goods from Subhash	20,000
April 4	Sold goods to Ramnath	15,000
April 6	Ramnath returned defective goods	1,000
April 10	Received cash from Ramnath and	13,800
	Discount allowed	200
April 12	Gopal sold goods to us	10,000
April 14	Paid to Gopal in full settlement of his account after deducting 5% discount
April 15	Paid Rent	10,000
April 16	Paid Rent of Hari Shankar's residence	5,000
April 18	Purchased goods for cash from Govind for ₹ 6,000 at 20% trade discount
April 20	Purchased goods from Govind for ₹ 10,000 at 20% trade discount
April 24	Paid to Govind ₹ 7,850 in full settlement of his account
April 25	Paid to Subhash ₹ 4,750 discount received ₹ 250
April 30	Paid wages ₹ 400, Salaries ₹ 4,000, Advertisement expenses ₹ 800 and Trade expenses ₹ 1,000

What is a Capital Reserve? How is it different from a Revenue Reserve?
OR
Distinguish between 'Revenue Reserve' and a ‘Capital Reserve' on the basis of:

1. Source of creation.
2. Purpose.
3. Usage.

'A' commenced his cloth business on 1st April, 2011 with a capital of ₹ 3,00,000. On 31st March, 2012 his assets were worth ₹ 5,00,000 and liabilities ₹ 1,00,000. Find out his closing capital and profits earned during the year.

Classify the following into Capital, Revenue and Deferred Revenue expenditure, stating reasons in each case:

1. A sum of ₹ 32,000 has been spent on a machine as follows: (i) ₹ 20,000 for addition to double the output, (ii) ₹ 5,000 for repairs necessitated by negligence and (iii) ₹ 7,000 for replacement of worn-out parts.
2. Total expenditure on a cinema building during the year was ₹ 2,00,000 out of which 20% related to repairs and 80% represented improvements and additions.
3. Compensation paid to a retrenched employee for the loss of employment.
4. Second-hand furniture worth ₹ 40,000 was purchased and repairing of this furniture cost ₹ 15,000. The furniture was installed by own workmen-wages for this being ₹ 5,000.
5. A person was injured by the motor car of the company. ₹ 10,000 was paid to him by way of compensation.
6. Advertisement expenditure in special advertisement drive.

Give the rules of Debit and Credit and explain them with imaginary examples.
Under Double Entry System of accounting each transaction has two aspects. One aspect is debit, i.e., receiving or incoming aspect. Another aspect is credit, i.e., giving or outgoing aspect. Debit and credit aspects of a transaction form the basis of Double Entry System.
Rules of Double Entry or Rules of Debit and Credit are formed on the basis of these two aspects in each of the business transactions. There are two approaches for deciding when to write on the debit side of account and when to write on the credit side of an account, i.e., which account is to be debited and which account is to be credited. The rules or: the basis of which such decision is taken are called Rules of Debit and Credit.
Rules of Debit and Credit (Traditional Classification) at a Glance:

S.No	Types of Account	Account to be Debited	Account to be Credited
1	Personal Account	Receiver	Giver
2	Real Account	What comes in	what goes out
3	Nominal Account	Expense and Loss	Income and Gain

From the following transactions, state the nature of accounts and state which account will be debited and which account will be credited:

S.No		₹
1	Mohan started business with cash	5,00,000
2	Purchased goods for cash	1,00,000
3	Sold goods for cash	1,50,000
4	Received interest from Ram in cash	500
5	Sold goods to Ashok	60,000
6	Purchased furniture for cash	50,000
7	Paid wages	20.000

Prepare an Accounting Equation on the basis of the following transaction:

1. Started business with cash ₹ 70,000.
2. Credit purchase of goods ₹ 18,000.
3. Payment made to creditors in full settlement ₹ 17,500.
4. Purchase of machinery for cash ₹ 20,000.
5. Depreciation on machinery ₹ 2,000.

Open a 'T' shape account of debtor 'Brij' and write the following transactions on the proper side:

S.No		₹
i	Sold goods to Brij on credit	25,000
ii	Cash received from Brij Discount allowed to him	10,000 500
iii	Goods returned by Brij	5,000